Multiple Choice

#15 (not sure)

Problems

1. (not sure)

2. (not sure)

3.

Profit 3,000,000
Less: Cost of Goods Sold -1,000,000
Less: Operations Expense -391,090
Less: Salaries -303,800
Less: Interest -489,196
Remainder 815,914

Aubrey Morris
Annual Salaries 152,200 151,800
Annual Interest on the Average Capital 244,778 244,418

Share in Remainder Profit

815,914 x 60% 489,428.40
Total share in Profit 886,406

4. (not sure)

5. (not sure)

6.

DGB, Capital Contribution 600,000

DSP, Capital Contribution 800,000
1,400,000

Share in Profit
DGB = 180,000 x 600,000 / 1,400,000 77,142.86
DSP = 180,000 x 800,000 / 1,400,000 102,857.14
Total 180,000.00
Partners Divide Profits According to Their Average Capital
Computation for Average Capital of DGB
DGB = 600,000 x 12 / 12 600,000
Drawing: March 1 - 100,000 x 10/12 -83,333.33
Additional Investment: May 1 - 100,000 x 8/12 66,666.67
Additional Investment: October 1 - 150,000 x 3/12 37,500
Drawimg: October 31 - 125,000 x 3/12 -20,833.33
600,000

Computation for Average Capital of DSP

DSP - 800,000 x 12/12 800,000
Additional Investment: April 1 - 200,000 x 9/12 150,000
Drawing: June 30 - 150,000 x 6/12 -75,000
Drawing: August 31 - 100,000 x 4/12 -33,333.33
Additional Investment: October 31 - 50,000 x 2/12 8,333.33
850,000

Division of Profits According to Capital

Average Capital of DGB 600,000.01
Average Capital of DSP 850,000

Share in Profit
DGB - 180,000 x 600,000.01 / 1,450,000.01 74,482.76
DSP - 180,000 x 850,000 / 1,450,000.01 105,517.24
180,000.00

7.

DGB DSP Total

DGB - 600,000.01 x 8% 480,000
DSP - 850,000 x 8% 68,000 548,000
DGB - Salaries 24,000
DSP - Salaries 48,000 72,000
504,000 116000 620000

Total Share of DSP (Total Salaries & Interest) 116,000

8.

AGB BDC
5% on Beginning Capital 30,000 -
Salaries (240,000 x 12) 240,000
Bonus (880,000 x 20%) 176,000

9.

Profit 880,000
Less: -30,000
Less: -240,000
Less: -176,000
Remainder: 434,000

Profit to be Divided in the Ratio 7:3

AGB (434,000 x 0.07) 303,800
BDC (434,000 x 0.3) 130,200
434,000

Equity Balance of AGB

(Beginning Capital + Share in Profit + 5% Interest)
600,000 + 303,800 +30,000 933,800

10.

Profit Balance is to be Divided Equally

Profit (Loss) -66,000
Divide by 3 -22,000

11.
How much is the share of ECV in the profit for the year? Answer: 64,177

ECV ATR
Credit 160,000 x 12 = 1,920,000 240,000 x 12 = 2,880,000
180,000 x 9 = 1,620,000 80,000 x 12 = 160,000
Debit 40,000 x 4 = -160,000 20,000 x 5 = -100,000
3,380,000 2,940,000
Average Capital of ECV: 3,380,000/12 = 281,667

Average Capital of ATR: 2,940,000/12 = 245,000

281,667
245,000
526,667

The partnership had a profit of P120,000 for the year. The partnership agreement provides that the profit
shall be divided according to the average capital ratio.

Income Summary 120,000 Computation:

ECV,
Drawing 64,177 ECV= (281,667/516,667) x 120,000
ATR, Drawing 55,823 ATR= (245,000/526,667) x 120,000

12. (not sure)

13. (not sure)

14.

JVV ADD Total

Interest on Average Capital
10% (240,000 - 25,000) 21,500
10% (360,000 - 25,000) 33,500 55,000

Salary Allowances
48,000 x 6 288,000
72,000 x 6 432,000 720,000

Bonus
20% (96,000 -775,000) 135,000

15.

JVV ADD Total

Average Capital Balances
10% (100,000 - 25,000) 7,500
10% (200,000 - 25,000) 17,500 25,000

Salary Allowances
288,000
432,000 720,000
295500 449500 745000

16.

S, Salaries 120,000
Interest 60,000
Share in Profit 20,000
S, Drawing -40,000
Amount to be Reported to BIR as his share in the partnership profit 160,000